Business, 16.03.2020 21:20 cmflores3245

The additional investment in a new computer system is a certain $290 comma 000290,000. It is likely to save an average of $120 comma 000120,000 per year compared to the old, outdated system. Because of uncertainty, this estimate is expected to be normally distributed, with a standard deviation of $8 comma 0008,000. The market value of the system at any time is its scrap value, which is $22 comma 00022,000 with a standard deviation of $3 comma 0003,000. MARR on such investments is 1818% per year. What is the smallest value of N (the life of the system) that can exist such that the probability of getting a 1818% internal rate of return or greater is 0.950.95? Ignore the effects of income taxes. Also note that market value is independent of N. (Hint: Start with Nequals=44 years.)

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The additional investment in a new computer system is a certain $290 comma 000290,000. It is likely...